McDermott: All Bets Are Not Off on Super Bowl Sunday

Posted February 4, 2010 at 11:32am

Celebrating the Super Bowl is one of the most anticipated American traditions, where activities include spending time with family and friends, eating food, and for many fans, placing a wager on the game. Unfortunately, while millions of Americans bet on the game, unless they are doing it from a casino in Las Vegas, they are engaged in an activity that Congress has decided is criminal. In fact, it’s projected that 99 percent of wagers on the Super Bowl will be placed illegally online or through a bookmaker, where consumers have no legal protections and are left vulnerable to exploitation.

[IMGCAP(1)]Many people may not even realize betting on sports is illegal, since millions engage in the activity and “the latest line” is run in the sports pages of every major newspaper. Further advancing the activity is the accessibility of online gambling. Out of the $80 billion to $100 billion Americans illegally wagered on the NFL last year, approximately half the wagers were placed online, according to a recent CNBC profile on the proliferation of illegal gambling activity.

While eliminating the threats posed by illegal bookmakers is difficult, Congress can move quickly to reduce unlawful activities and protect consumers by legalizing and regulating online gambling and sports betting.

Despite attempts by the federal government to prohibit online gambling, primarily through passage of the Unlawful Internet Gambling Enforcement Act of 2006, millions of Americans are wagering approximately $100 billion each year on the Internet. Clearly, the current prohibitory approach to online gambling has failed, leaving consumers vulnerable to fraud, identity theft and money laundering, while billions of dollars flows out of the U.S. economy into the hands of offshore gambling operators who exploit U.S. laws.

In pending legislation, House Financial Services Chairman Barney Frank (D-Mass.) has offered a sensible solution to regulate online gambling: allowing licensed operators to accept wagers in the U.S. if they put in place systems to protect consumers and collect applicable fees on the activity.

Congressman Frank’s legislation would require operators to use the latest technological safeguards, including advanced identity verification technologies, as a condition for receiving a license. These technologies are critical to better protect children and problem gamblers who are especially endangered in today’s unregulated environment. Each state would also have the right to decide whether to allow the activity or even impose additional restrictions.

At a time when federal and state government programs and budgets are being severely curtailed, it doesn’t hurt that online gambling regulation, imposed on an existing underground industry, would be a significant source of new revenue. According to a recent estimate by the Joint Taxation Committee, regulating Internet gambling could yield $42 billion in revenue in 10 years.

Although Chairman Frank’s legislation would not allow Americans to place an online wager on sports, I am hopeful that its passage could open the door to allowing this activity in the future. You might expect the sports leagues to share in this same view, wanting to find a better way to protect consumers, enhance the integrity of its games and end illegal gambling activity, but they have turned out to be the most vocal opponents to any expansion of online gambling activity.

At the same time as the sports leagues complain that regulated online gambling could “harm honest athletic competition,” they operate under a clear double standard, having successfully lobbied and received an exemption for fantasy sports as a “lawful” online gambling activity in the Unlawful Internet Gambling Enforcement Act. Furthermore, it’s more likely that the integrity of athletic events would be improved, rather than hindered in a regulated environment. Just as is required for sportsbooks in Nevada’s casinos, licensed online gambling operators would be required to spot and report irregularities in betting patterns in order to make match-fixing more difficult.

Regardless of which team takes home the Super Bowl XLIV rings, nobody wins when fans are left unprotected by outdated and unrealistic gambling laws. That’s why Congress should consider revising these laws in 2010, so Americans can bet safely on their favorite teams by the time they are celebrating Super Bowl XLV.

Rep. Jim McDermott is a Democrat from Washington.